The Federal Communications Commission formally stepped into the AT&T-T-Mobile merger Thursday with a public notice that sets up certain procedural rules for the merger review going forward.
AT&T and T-Mobile are expected to file formal applications with the FCC for transfer of wireless licenses by the end of the month, according to senior FCC officials. Today's public notice, or docket, is basically prep work so the commission is ready to move when everything is submitted.
That includes a protective order that will keep confidential information private during the proceeding so AT&T and T-Mobile trade secrets are not revealed to competitors like Verizon and Sprint.
The FCC review will be conducted in conjunction with the Department of Justice, officials said.
AT&T surprised the tech community recently when it announced plans to acquire T-Mobile for $39 billion. AT&T argued that the purchase will help stop the spectrum crunch and spur the companies's deployment of 4G service.
Given that the companies have not yet filed their formal applications, the FCC said it cannot comment on the specifics of the merger. But in general, reviews of wireless mergers consider whether the deal will serve the public interest, convenience, and necessity, according to officials.
After establishing that the deal complies with specific requirements in the Communications Act and FCC rules, the commission will move on to a broader public interest evaluation that will include, but is not limited to, a look at how the deal will affect competition. This will be a bit broader than a standard antitrust review, and will also take into account whether the deal would encourage the development and deployment of new services, among other things.
The FCC might require conditions for approval, like it did in the Verizon-Alltel and Comcast-NBCU deals. Those conditions might be requested by the companies in order to pass the public interest test or required by the commission.
How does the FCC evaluate competition? In general, the FCC will identify specific markets that require additional review using a test known as the Herfindahl-Hirschman Index (HHI), which measures concentration of providers. The commission will also use the spectrum screen, which looks at the amount of spectrum that's available for mobile services in a given area and what percentage of that spectrum is held by the parties in question; AT&T and T-Mobile, in this case.
AT&T has argued that the deal will provide T-Mobile customers with access to AT&T's spectrum, and free up T-Mobile's AWS spectrum for LTE use. During 2008's 700-MHz auction, AT&T scored 227 licenses for a total of $6.6 billion.
Not surprisingly, many of the issues evaluated in wireless mergers are specific to the particular cases, but the FCC could look at things like number of subscribers and revenues.
If the FCC finds that the deal is not in the public interest, meanwhile, a hearing on the matter will be held before an administrative judge.
The FCC does not have a timetable for when it will approve the merger at this point, though mergers are held to a loose 180-day clock, which begins after the applications are filed and reviewed for completeness.
Congress, meanwhile, is expected to weigh in on the deal next month with a May 11 hearing before the Senate Judiciary Committee.